South Australian Premier Jay Weatherill says Holden will stop making cars in Australia from 2016 unless the Federal Government commits by Christmas to more taxpayer support.
Prime Minister Tony Abbott said he did not want the car industry living from hand-to-mouth on subsidies and the Coalition went into the election promising to cut $500 million of car industry assistance.
SA Premier Jay Weatherill is warning that unless the Federal Government commits to a funding boost by Christmas, Holden will announce it is closing down manufacturing in Australia.
"Directly it would mean that beyond 2016, like Ford, they would no longer be in Australia," he said.
"That would clearly ... have knock-on effects to Toyota."
Mr Weatherill is warning it would see 16,000 jobs lost in South Australia alone, both directly and from components suppliers.
Independent Senator Nick Xenophon said he was encouraged by the new Industry Minister's approach to dealing with Holden's manufacturing future.
Senator Xenophon spoke with new minister Ian MacFarlane on Wednesday night and a further meeting is planned within a fortnight.
He said Mr MacFarlane was committed to ensuring Holden remained a viable company in Australia.
"He gets the importance of tackling this issue, he understands how important Holden is to South Australia and I'm really encouraged by the fact that the very first text he made when he was appointed Industry Minister was to Mike Devereaux, the CEO of Holden," he said.
Mr MacFarlane said there were many more important issues than the figure of $500 million everyone seemed focused on.
He said he was prepared to tackle the issues with both sides of politics and the unions to see what could be achieved.